Bitcoin mining – an (un)surprising resurgence? – News & insight – Cambridge Judge Business School

New data on global bitcoin mining released by the Cambridge Center for Alternative Finance (CCAF) as part of the Cambridge Digital Assets Program (CDAP) confirms the growing dominance of the United States and reveals a surprising resurgence.

New data from the mining map, covering the period between September 2021 and January 2022, shows that the United States has remained at the forefront of bitcoin mining and has extended its leadership position (37, 84%) amid global hashrate recovery. Following a surge in covert mining operations following the June 2021 government-imposed ban on bitcoin mining, China has re-emerged as a major mining hub (21.11%). Kazakhstan (13.22%), Canada (6.48%) and Russia (4.66%) have been relegated to more distant places.

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remarkable hash rate recovery results in new all-time high

when we released the latest update to the cambridge bitcoin electricity consumption index (cbeci) mining map in october 2021 (covering data up to the end of august 2021), the bitcoin network was dealing with the fallout of the Chinese ban on domestic mining activities. the government crackdown immediately resulted in a sharp decline in the total hashrate, the aggregate computing power of the network, which bottomed out at 57.47 exhashes per second (eh/s) on June 27, 2021.

However, the trend quickly reversed as miners began relocating their operations overseas, and by the end of the year, the total network hashrate had almost fully recovered to pre-ban levels (193 .64 eh/s on December 21, 2021). moreover, the upward trajectory continued into early 2022, culminating in a new hashrate all-time high of 248.11 eh/s in February, demonstrating the considerable resiliency and flexibility of the bitcoin mining industry. As a result, it is worth noting the distinction between absolute hashrate levels and relative proportions of countries when looking at country-specific developments: a reduction in a country’s share does not necessarily imply a decrease in national mining activities. , but may indicate stagnation or slower growth relative to the rest of the world.

Now, exclusive data obtained in collaboration with partner mining pools, poolin, viabtc(1) and foundry provide new insights into the whereabouts of this new hash rate capacity. as the rest of this post will show, it turns out that hashrate recovery has not been evenly distributed.

we expanded its leadership position as the largest mining center in the world

New data confirms that the US has not only maintained its leading position as the world’s largest mining hub, but has also outperformed the rest of the world in terms of hashrate growth. this is evidenced by the increase in installed capacity from 42.74 eh/s (35.40%) in August 2021 to 70.97 eh/s (37.84%) in January 2022. on January 26, 18 eh/s in June) have outpaced overall network growth, leading to a significant increase in hashrate percentage from 10.55% to 21.81% during the first half of 2021.

This update also brings a new addition to the tool: a US regional mining map. uu. now provides more granular information on the hashrate distribution of the largest bitcoin mining market at the state level. data shows that bitcoin mining within the us. uu. It clusters around certain states, with the three largest, Georgia (30.76%), Texas (11.22%), and Kentucky (10.93%), accounting for more than half of the country’s overall hashrate. access to comparatively low-cost electricity, available accommodation capacity and the enactment of favorable legislation (2), (3), (4) could be factors that explain the influx of miners to those states. Significant mining activity can also be found in the states of New York (9.77%), California (7.9%), North Carolina (4.7%) and Washington (4.1%).

challenge, methodological trade-offs and anomalies

Most notable, however, is the apparent comeback of China. following the government ban in June 2021, the reported hash rate for the entire country effectively plummeted to zero during the months of July and August. however, the reported hashrate suddenly returned to 30.47 eh/s in September 2021, instantly catapulting China to second place globally in terms of installed mining capacity (22.29% of the total market). this strongly suggests that significant underground mining activity has formed in the country, empirically confirming what industry experts have been assuming for a long time. Access to off-grid electricity and geographically dispersed small-scale operations are among the main means used by underground miners to hide their operations from authorities and circumvent the ban (5).

However, the abruptness of the resurgence raises questions that go back to methodological trade-offs. a return of this magnitude within a month’s time would seem unlikely given physical constraints, as it takes time to find existing untraceable lodging facilities or build new ones on that scale. instead, a more likely explanation lies within our top-down research methodology that relies on aggregated geolocation data reported by partner mining pools. This approach is theoretically vulnerable to deliberate obfuscation by individual miners who may, for various reasons, choose to hide their location through the use of virtual private networks (VPNs) or other proxy services. This behavior is best illustrated by the persistently high percentages reported from countries such as Germany (3.06%) and Ireland (1.97%) where, to our knowledge, no significant mining activities are known to occur (6).

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In practice, we believe that this limitation only moderately affects the validity of the overall analysis (7) for most of the time, with the exception of sudden “shocks” that fundamentally alter risk tolerance and consumer expectations. miners. With the government ban being one of those impacts, it is likely that a non-trivial portion of Chinese miners quickly adapted to the new circumstances and continued to operate covertly while hiding their tracks using foreign proxy services to divert attention and scrutiny. . As the ban sets in and time has passed, it seems that underground miners have become more trusting and seem happy with the protection offered by local proxy services.

development in other important mining centers

with the latest update, kazakhstan became a popular destination for miners leaving china and quickly became a major bitcoin mining hub, hosting around 18.10% of the total network hashrate as of august 2019. 2021. Total hashrate continued to rise in September and peaked at 27.31 eh/s in October, until repeated power outages towards the end of last year and a week-long internet outage earlier this year forced the miners to temporarily suspend operations. following the electricity shortage, the government took a tougher stance on mining activities by raising taxes (8) and beginning to crack down on unregistered bitcoin miners (9). as a result, total mining activity fell to 24.79 eh/s in January 2022, causing the country’s market share to drop to 13.22%. Whether and how power shortages and political unrest will continue to affect Kazakhstan’s future as a major bitcoin mining hub remains to be seen.

Russia, on the other hand, not only experienced a substantial drop in relative hash rate from 11.23% in August 2021 to 4.66% in January 2022, but also a significant decrease in the total contribution of the installed mining capacity from 13.56 eh/s to 8.74 eh/s during the same period. This development seems a bit counterintuitive at first considering that Russia was believed to become an attractive location for Chinese miners thanks to its vast energy reserves and geographical proximity. a deterrent reason could be the perceived political risk given the Russian central bank’s vocal opposition to bitcoin mining, even going as far as lobbying to ban this activity (10). The recent invasion of Ukraine, and the resulting financial sanctions, have added further geopolitical risks that could push foreign investors and companies to more politically and economically stable regions to deploy their hardware.

canada saw only a moderate increase in its hash rate from 11.54 eh/s in August 2021 to 12.15 eh/s in January 2022, resulting in a market share loss of 9, 55% to 6.48%, as the total network hash rate grew significantly faster. Iran, which was previously among the top 10 mining hubs in the world, saw a sharp drop in reported hashrate from 3.75 eh/s (3.11%) to 0.23 eh/s (0.12%) in January 2022, joining the long tail of other countries with percentages below 1%.

a new global bitcoin mining landscape

This update has provided much-awaited information on mining developments following the Chinese government ban. The geographic landscape of mining has changed substantially again, with the United States now cementing its dominant position by a wide margin, while other countries are only modestly increasing capacity. These geographical changes in mining activities highlight how relocations affect the overall sustainability of the network. for example, recent research has suggested that the Chinese decision to ban bitcoin mining has worsened, rather than improved, bitcoin’s environmental footprint (11). To help shed light on the environmental externalities of bitcoin, we are working to release, in a later update, a new model that estimates greenhouse gas (GHG) emissions from the network on an ongoing basis.

As part of this update, we’ve also made visual changes and other adjustments to the comparison and methodology sections of the website based on user feedback. furthermore, we have adjusted the methodology for our best estimate of power demand by adding specific constraints to the list of mining equipment so that the hardware sample is more representative of the miners’ current equipment portfolio. see a full list of changes.

We will continue to work with our partners and our network to bring further improvements to the tool and are inviting constructive feedback and suggestions from the ecosystem. contact us.


(1) data reported until November 2021.

(2) asher-schapiro, a. (2022, March 21). upgrade 1-insight-coal to crypto: gold rush bringing bitcoin miners to kentucky. Reuters Retrieved April 10, 2022, from Reuters.

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(3) g hb1342 | 2021-2022 | ordinary session. (2022, February 17). legiscan retrieved on April 10, 2022, from legiscan.

(4) aratani, l. (2021, August 17). why bitcoin entrepreneurs are flocking to rural texas. the Guardian. Retrieved April 10, 2022, from the keeper.

(5) follow them, m. (2021, December 19). inside china’s underground crypto mining operation where people risk everything to make bitcoin. cnbc. Retrieved April 1, 2022, from cnbc.

(6) The affected countries are therefore marked with an asterisk on the mining map and the corresponding disclaimer.

(7) Higher latency in network connections generally reduces mining revenue because longer block propagation times can result in orphaned blocks that do not earn a reward. for this reason, miners are encouraged to choose a local proxy service that is geographically close.

(8) follow them, m. (2022, January 7). Deadly kazakh protests hit bitcoin as world’s second largest mining hub shuts down. cnbc. retrieved on April 10, 2022, from cnbc.

(9) wilson, t. (2022, January 17). Kazakhstan’s bitcoin “paradise” may be losing its shine. Reuters Retrieved April 10, 2022, from Reuters.

(10) pismennaya e. & Biryukov, A. (2022, January 20). the bank of russia seeks to ban crypto mining and trading. Retrieved April 21, 2022, from Bloomberg.

(11) de vries, a. & gallersdorfer, u. & Klaassen, L. & stole, c. (2022). reviewing the carbon footprint of bitcoin. joule. retrieved from joule.

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